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WILLIAM GUGGENHEIM 







Our 

Republic Triumphant 


A Plea for Sane Banking and Sound Money. 
A Plea for Business Co-operation. 

A Plea for Constitutional Government. 


LIBERTY, EQUALITY, FRATERNITY 


Published by 

American Defense Society, Inc. 

44 East 23d Street, New York 



Copyright, 1918, 

By William Guggenheim 



.JM'f 31 1918 

'GQ;A497Gi4 


/TrVO j 



Success 

(Written in 1910) 

S UCCESS is difficult to define or interpret. 
Individuals relatively unimportant may 
well lay claim to complete success, while 
others, though exercising a wide influence in the 
affairs of the world, may rightly be considered 
failures. But without wishing to sermonize, and 
confining myself to success as applied to busi¬ 
ness solely, I might say that for its accomplish¬ 
ment and fulfillment it requires honesty, en¬ 
ergy, conscientiousness and tact. It may seem 
strange, but frankness compels the admission 
that its degree is largely a matter of luck and 
opportunity. 

He who has performed his work well, whose 
every act has savored of honesty and righteous¬ 
ness and every effort has been to spread good 
cheer and kindliness among his fellowmen, needs 
no diadem and sceptre to establish his rightful 
place in the world of success. 


5 


\ 









I 








Foreword 

The reader will observe that it was my belief 
that in the year 1912 our national problems were 
to be treated in a way that would result in the 
nationalization of our people. I was disap¬ 
pointed, for political events took a turn that I 
did not expect. When Mr. Wilson was elected 
to the presidency in that year, many hoped that 
he would pursue policies that would permit of 
nationalization. But the President saw fit to 
revert to Jeffersonian policies wherein individ¬ 
ualism was to assert itself. A continuation of 
the latter policies would have proved disastrous 
to the Nation. 

But the starting of the European conflict 
necessitated a return to nationalism or federal¬ 
ism, which is the policy advocated in the follow¬ 
ing pages. The hoped for nationalism after all 
was simply deferred, and that hope has now been 
fulfilled. 

As to the prophesy regarding the ultimate 
outcome of affairs in Germany, I feel confident 
that the future will sustain it. The prediction 
is based not only on a careful financial and eco¬ 
nomic study of Germany’s condition, but also 
of her acts. Unrepentant Germany will learn 
that the wages of sin is death. 

The triumph of our republic rests largely upon 


7 


Sane Banking and Sound Money, for —A nation 
cannot have a clear conscience unless it adheres 
to Sane Banking and Sound Money , the influ¬ 
ence of which extends throughout every field of 
activity. 


8 


The Road to Peace 

A Plea for Sane Banking and 
Sound Money 


America, as Allies’ Banker, 
Must Increase Production 


Task Ahead to Adjust Affairs So Country Will 
he Prepared Financially and Economically 
to Meet Reconstruction Problems — 
Heavy Responsibility on Reserve 

Board . 


Now that the second Liberty Loan has be¬ 
come history, with the four and a half billions of 
dollars or more secured for the Treasury of our 
country, the details of the loan can be discussed 
without one’s motives being questioned. 

The American people have responded mag¬ 
nificently to the appeals that have gone forth 
from every quarter by those directly behind this 
huge flotation, and they have poured their dol¬ 
lars into the United States Treasury unhesitat¬ 
ingly, and have even borrowed, so as to swell 

PUBLISHER’S NOTE. 

The following plea was first published by the American 
Defense Society in Dec., 1917. Note that most of the 
author’s suggestions have since been adopted. 

Reprinted from The Journal of Commerce and Commercial Bulletin, 
Jan. 2, 1918. 


11 






their subscriptions. These voluntary subscrib¬ 
ers, as well as the many helpers who have made 
this loan so gigantic a success, are entitled to the 
fullest credit for their patriotic acts. 

If in the following article it is indicated that 
much of the effort expended might have been 
turned into channels that would have proven of 
greater benefit to the nation, I wish it under¬ 
stood that the purpose is simply to present more 
clearly the real needs of the hour. 

To begin with, however, it seems to me to be 
proper to point out the importance of not bring¬ 
ing disappointment to those who have subscribed 
to the loan, whether in a large or small amount; 
for, in the event of the price of the bonds de¬ 
clining very materially below par value as a re¬ 
sult of poor financial judgment, we must realize 
that human nature being human nature any ma¬ 
terial decline will surely bring disappointment to 
the subscribers. 

Problems of Loan Raising 

I do not question the sincerity or integrity of 
any one who has been primarily engaged in 
either the first or second Liberty Loan flota¬ 
tions, but I do know that I am justified in re¬ 
viewing the situation so that future loans can be 
handled in a manner that will combine the in¬ 
vestment consideration with the patriotic im¬ 
pulse. 

The first Liberty Loan of two billions of 3 y 2 
per cent “tax exempt” bonds was unfortunate" 


12 


as it was a mistake not in principle, but the time 
of its issuance. It is apparent that this loan will 
be of great benefit to those who have made ab¬ 
normally large profits as a result of the war, for 
they have been able to convert a large part of 
these profits into cash and reinvest at their 
leisure in the 3% per cent tax exempt bonds. 

In principle, a tax exempt bond at a low rate 
of interest is most advisable, as it encourages 
thrift and at the same time gives some guarantee 
against a too radical attack on capital. 

We must realize that governments can come 
under the influence of those who are opposed to 
capital, and that a restriction of the capitalistic 
efforts for progress could thereby result in tem¬ 
porary detriment to the nation; I say temporary, 
because reaction will naturally set in against 
radicalism of this kind so that government 
parties resorting thereto would eventually meet 
with disfavor. 

With the above facts in mind, let us revert to 
to-day’s industrial conditions. With the unfor¬ 
tunate inflation which has resulted from our 
methods of financing during the past few years, 
we have arrived at a point where labor and com¬ 
modities have risen unduly. 

Price Question at Issue 

If we wish to continue to finance on a 4 per 
cent basis, it is important for those responsible 
for our finances to see that commodities, includ¬ 
ing labor, do not, at least, rise further; in fact, a 


13 


decline should be brought about, for how can 
one hope for continued investment in a 4 per 
cent bond when we are on an 8 per cent invest¬ 
ment basis as compared with a pre-war basis of 
6 per cent. I might add, that if the cost of labor 
continues to rise without adequate compensation 
through economies and efficiency we will soon be 
on a 10 per cent basis, for we must recognize 
that as the cost of labor indiscriminately rises, 
the cost of living and taxes automatically rise, 
as well as the price of money, so that a higher 
rate of interest is demanded on capital; if this 
principle is not established the encouragement 
to save and invest is withheld. 

To reach, of course, the exactions of those who 
demand a high return on capital, even when their 
income is large, we resort properly to the surtax 
system which made the second Liberty Loan also 
attractive to large investors. 

Although industrial activity will result from 
the necessity of stimulating production for war 
purposes, it is wise to prevent, if possible, the 
activity from becoming abnormal. We must 
appreciate that we are at best encouraging a fic¬ 
titious prosperity, and our observation has been 
that the American people seem to revel in pros¬ 
perity while they do not save and even become 
inefficient; unfortunately it requires adversity to 
encourage on their part a spirit of saving, econ¬ 
omy and efficiency. 

The wisdom, therefore, of contracting loans 
through our system of credit and bringing about. 


14 


if possible, a trade reaction, without of course 
interfering with our war needs, is self evident. 
What we should have at all times is not “cheap” 
money, but money—cheap; we should have not 
depreciated money, but sound money cautiously 
loaned at a fair rate of interest. 

Banks and bankers throughout the country 
have been persistently criticised for their meth¬ 
ods of financing, and I feel that it has been 
properly said that American bankers have 
proven themselves promoters rather than bank¬ 
ers. 


The Investors’ Standpoint 

So many of the bond and stock flotations have 
turned out unfortunately that investors have 
been discouraged from further purchases; they 
surely have reason to feel that they have been 
unfairly treated. They ask continually, Is there 
no responsibility on the part of those who pro¬ 
mote or sell securities? Why is it impossible to 
secure gilt-edges securities which are always re¬ 
deemable on the date of their maturity? 

How many investors make investments simply 
because bankers put their names and reputations 
behind the securities which they are floating? 
Has not the investor a right to look to the banker 
as to the soundness of his investment. Has he 
not a right to feel that if promises have been 
made from the highest sources in the financial 
community as to the soundness of the invest¬ 
ment, that he should be properly protected 


15 


against any loss of his capital at maturity, and 
not to suffer more than normal depreciation in 
the interim? 

The United States Government has taken the 
place, not only of the banking community of this 
country, but practically that of the Allied na¬ 
tions. For the moment the Government is inter¬ 
ested solely in its own bonds. It is indirectly 
responsible for a part of the Allied interests by 
the method of financing, which has necessarily 
been forced upon it. Congress, therefore, should 
not hesitate to demand a toll for taxes large 
enough to assure that every dollar’s worth of our 
obligations will be met. 

The bondholder demands and is entitled to the 
first protection. We all know that the only way 
to avoid receiverships for corporations is through 
pursuing a wise financial course and that if many 
of our corporations had in recent years adopted 
careful financial methods and not distributed 
dividends to stockholders that would have better 
served the interest of their properties, many re¬ 
ceiverships would have been avoided. 

We should, therefore, not seek to avoid the 
heavy taxes necessary to produce the tremendous 
revenues that the nation requires. Furthermore, 
we must bear in mind the frightful ravages that 
are resulting to the entire world on account of 
this war. It is our duty, not only to ourselves, 
but to posterity, to see that in our methods of 
taxation we keep in mind the destruction of 


16 



jfilPOOUTlQj 1 


by W2 Guggenheim's Book 


published by American Defense Society 


h" 




ill 1 fll I" 

Jr 


THE ROAD TO PEACE 




















































property that is taking place, and that so much 
money is being put into intangible assets. 

No Necessity for “Kiting” 

“Kiting” is a well known term to the financial 
community, and there is no need for our Govern¬ 
ment to resort to it. Our resources are tremen¬ 
dous, and all we need to do is to apply our 
intelligence and energy and surplus production 
will result and cover our needs. In fact, it might 
be said that less objection to taxes on profits at 
a time like the present and a little more patriotic 
fervor to stimulate production where required 
and to diminish it where not required; likewise an 
effort to eliminate waste and extravagance and 
to restrict national, state and municipal financ¬ 
ing to actual needs, would do infinitely more 
good. 

It is also well to understand when it comes 
to a question of heavy taxation in order to cover 
the Government’s needs during the present 
crisis, though admitting the industrial depression 
immediately prior to the war, that securities were 
compared to previous quotations and recent ones, 
very low in price and their dividends threatened. 

Furthermore, many of the steel and some im¬ 
portant munition companies would have been 
very great sufferers if the European conflict had 
not occurred and thereby helped our industrial 
situation. 

The real power to correct and adjust our 
financial condition lies with the Federal Reserve 


17 


Board. I feel it my patriotic duty to emphasize 
not only that fact, but to also state that it is 
imperative for the board to see that our finances 
are so adjusted that when this unfortunate war 
is concluded and our soldiers come marching 
back, triumphantly, as they will from the battle¬ 
field, we will be prepared financially and eco¬ 
nomically for the reconstruction with which we 
will be confronted. A grave danger lies in their 
returning to an impoverished country, and if we 
allow the country to be unnecessarily impover¬ 
ished who can deny but that we will then face 
civil strife equal in seriousness to the interna¬ 
tional strife that now engulfs us. 

Nation’s Financial Condition 

Estimates have been given by various individ¬ 
uals placing the wealth of the nation at $250,- 
000,000,000. If we accept these figures, which 
I believe to be approximately correct, we must 
understand that the liquid assets are about $80,- 
000,000,000. The income of the American 
people is estimated at about $40,000,000,000 
yearly. It must be noted in stating these figures 
that we are accepting conditions that prevailed 
a short time ago through the abnormal prosper¬ 
ity which the nation enjoyed during the past few 
years. 

Our people have not been in the habit of 
spending their entire income, for a good part of 
it has gone, from time to time, into new invest¬ 
ments, exploitations, betterments, destruction of 


18 


property and other channels. What we are ap¬ 
parently interested in is the amount of money 
that is required for our necessities. For if we 
wish to prosecute the war to a proper successful 
conclusion we must arrive at a basis that will 
allow an amount necessary for our reasonable 
existence; that is, the entire surplus should be 
conscripted without hesitancy, if such action be 
found necessary from a financial and economic 
standpoint. 

It will be seen from the above statements and 
figures that in order to secure money for carry¬ 
ing on the war, it is essential for us to produce 
surplus wealth; for it is surplus wealth that we 
convert into credit, which furnishes the money 
for carrying on the war. We must, therefore, 
consume a minimum amount and at the same 
time produce a maximum amount of required 
products from mine, farm and factory. In addi¬ 
tion thereto, we must employ our best intelli¬ 
gence in effecting economies which will enable 
us to reach the maximum surplus production for 
ourselves and our Allies at a minimum cost. 

The Supply of Gold 

It is estimated that there are three billions of 
gold which, in conjunction with a large amount 
of silver and paper currency, constitutes our 
money or circulating medium. Naturally the 
only extrinsic use that this money has is to enable 
us to exchange one commodity for another. 

During this war it is hardly conceivable that 


19 


our people, except the most timid, would be so 
foolish as to withdraw their money from the 
banks. The European banks have in time of 
excitement been threatened very frequently with 
large gold withdrawals, but they have always 
checked the procedure by refusing to pay out the 
gold. The withdrawals of paper currency can¬ 
not cause any inconvenience, for it is the bank’s 
privilege to substitute new paper currency for 
any withdrawals affected. 

With the above frank statements, may we not 
hope that the future will witness less stress laid 
on the money needs of the Government, and 
more upon the fact that the nation must come to 
a realization that to win the war a maximum sur¬ 
plus production is essential, and that to reach 
maximum surplus production the nation must, 
in an economic sense, “strip to the waist”? 

When future Liberty Bonds are presented to 
the people for subscription, let us hope that they 
will subscribe freely and view them from an in¬ 
vestment standpoint, and always be willing to 
patriotically place their available moneys at the 
disposal of the Government for its war needs. 

Reserve Board’s Responsibility 

I believe it only proper to state that the 
manner of handling the second Liberty Loan 
should be questioned only as to the extent of the 
energy applied to it, as its legitimate purpose as 
herein set forth is surely clear. 

So much absurd confusion seems to be in the 


20 


public’s mind with regard to the terms “anarchy” 
and “socialism” that it may be fitting to remark 
here that every civilized government is “a state 
of socialism.” A civilized government simply 
represents a community of interests. It is not 
socialism that the people of a civilized nation is 
fighting but anarchy, and when individuals or 
any class within this socialistic state or govern¬ 
ment take by stealth more than is their due from 
the fruits of brains and labor, or arrogate to 
themselves undue power, they have committed as 
grave an error as those who break into a com¬ 
munity for the purpose of confiscating wealth. 
It is therefore our duty to see not only that 
anarchy does not break into our socialistic state, 
but that it is likewise suppressed within. 

In conclusion I might say that the responsi¬ 
bility that rests with the Federal Reserve Board 
and the banking community is a grave one, and 
my prayer is that I am warranted in the belief 
that they all realize the situation, and that they 
will satisfactorily administer our finances. 

Finally, may I urge that a sincere personal 
effort toward thrift, economy and efficiency be 
unhesitatingly made by us all in order to help to 
bring the war to a satisfactory, prompt and de¬ 
cisive conclusion? 


21 


The Nation Warned of the 
Danger of Inflation 


Proper Control of Trade and Industry Through 
Credit System—Restriction Necessary 
for Efficiency . 


The American Defense Society in urging vari¬ 
ous policies for national adoption, makes the 
following statement: 

“The National Defense Council has recently 
declared, ‘that new issues should be limited to 
conserve the financial resources of the nation for 
national use.’ We believe it would be wise to 
have this recommendation embodied in a law. A 
similar law was adopted in England early in the 
war and under the system of licensing, all issues 
actually justifiable and useful in time of war, has 
produced beneficial results. Issues to refund 
maturing securities should be excepted.” 

In order to appreciate the importance of tak¬ 
ing what will be regarded as proper action in 
reference to the handling of our finances, it 
seems fitting to call attention to views, that 
surely must be recognized as erroneous, though 
held by important individuals in the community. 

Reprinted from N. Y. Commercial, Dec. 3, 1917. 


22 





Some have stated that we, as individuals, should 
aid to release men from fields of activity by limit¬ 
ing the use of labor that serves our comforts and 
pleasures. 

A prominent bank official expressed the hope 
that the Liberty Loan be largely oversubscribed 
that we might continue our great prosperity. 

In a pamphlet issued by an important bank¬ 
ing institution there was expressed the belief 
that higher prices of all commodities would in 
themselves prove corrective to the chaotic state 
of business. 

It appears, therefore, that due attention is 
not given to the fact that it is through the system 
of credit that we should look for the proper con¬ 
trol of the Nation’s industrial and commercial 
activities. The necessity for our vast banking 
institutions to scrutinize credit most closely, and 
to rationally restrict it, unquestionably exists. 

To enact a law that would fully cover the 
question of credit extension, is difficult. There¬ 
fore, we believe it is important for the adminis¬ 
tration likewise to interest itself in this question 
and to impress upon the Federal Reserve Board 
the wisdom of continuing its effort to completely 
mobilize the moneys of the nation so that credits 
can be restricted by the banks and thereby en¬ 
force throughout the nation the economies and 
efficiency that are paramount to a completely 
successful conclusion of the war. 

No doubt the most fertile field will be found 
in the expenditures that are being made through- 


23 


out the country by the various states, counties, 
municipalities and towns. The National Gov¬ 
ernment should also curtail work involving great 
outlays of money, which work can be done at 
some more opportune time. It is to be hoped 
that with matters of this kind, political consider¬ 
ations will not retard their effective adoption. 
We can estimate to what extent politics may 
interfere when we consider the tremendous 
amount of capital involved alone in our public 
utilities corporations. 

It is apparent that the manner of the Federal 
Reserve Board’s treatment of the finances of the 
Nation during the past few years, has not been 
carefully studied. We have unquestionably been 
brought to financial, commercial and industrial 
chaos as a result of their failure to set aside large 
gold reserve for retiring circulation, when ab¬ 
normal gold importations >vere made possible by 
the tremendous war business that we were doing 
with the various European powers. In addition 
to permitting this gold to act as a stimulant to 
trade, through unusually large loan expansion, 
the Board arranged for new currency inflation, 
and unwisely created thereby the dangerous fi¬ 
nancial condition which exists to-day. 

In this connection, it is interesting to refer 
to a statement issued by the Controller of the 
Currency on Oct. 19, 1917, and note the follow¬ 
ing: 

If six billions of deposits should be withdrawn 
from the national banks of the country the deposits 
would still be $286,000,000 greater than they were at 

24 


this time in 1913, the year before the outbreak of 
the European war. Loans and discounts amount to 
$9,055,000,000, an increase over June 20, 1917, of 
$237,000,000, and an increase as compared with 
Sept. 12, 1916, of $1,195,000,000. 

The comptroller unfortunately failed to give 
the loans and discounts of Oct. 19, 1913, so that 
a comparison could have been made between that 
date and that of October 13, 1917. Naturally a 
great increase in loans and discounts exists and 
the deposits were not used in a way to preserve 
a sound currency and a sound banking situation. 

An idea of the mischief that can be wrought 
from inflation whereby business is artificially 
stimulated, can be realized when we refer to the 
coal production of the United States for the cur¬ 
rent year which is estimated will reach more than 
660 millions of tons of both bituminous and an¬ 
thracite, and which will make the largest tonnage 
that has ever been produced in this country. 
From the figures given, it is evident that there 
is nothing wrong with the production of coal, but 
that there is something radically wrong with its 
consumption. 

A wise financial policy would have enforced 
enconomies and efficiency throughout the coun¬ 
try, and resulted in a saving of fifty millions of 
tons or over of coal that have now been con¬ 
sumed in unnecessary electric lighting. If a sav¬ 
ing of say fifty million tons of coal had been 
made in the above manner, it is easy to estimate 
what the result would have been: 

(1) The release of labor for employment in 


25 


other much needed directions. (2) Relief to our 
transportation system. (3) Improvement of 
our financial condition. (4) Greater value to all 
property by the elimination of this waste and ex¬ 
travagance. 

“We are still confronted with the perils of con¬ 
tinued inflation, which can only be avoided by the 
Federal Reserve Board appreciating the situa¬ 
tion and compelling the retirement of circulation 
when not serving actual and war needs, and those 
of our Allies. 

It is important furhermore that the demands 
of organized labor for continued advances in 
wages be halted, for if they are continually met, 
we will simply experience a further increase in 
the cost of living, as all commodities will rise and 
the price of money for investment will follow the 
same course. 

Organized capital can, to a large extent, pro¬ 
tect itself, but the unorganized interests, who are 
largely in the majority, will suffer seriously from 
the above vicious practice. It is imperative that 
this entire situation should be laid before Con¬ 
gress in a way that will aid them to prevent the 
impending ruin to the Nation. 

We must bear in mind that in the past year 
there has been a shrinkage in securities from 
which the public has suffered to the extent of 
fifty to sixty billions of dollars. Naturally, or¬ 
ganized capital and shrewd followers have not 
suffered by this depreciation, and, no doubt as in 
the debauch of December, 1916, many have even 


26 


made money thereby—some likely by going 
short of securities—and it is fair to estimate that 
from five to six billion of dollars have been made 
by those various individuals. 

The public must be warned that they are 
confronted with another possible collapse, for if 
inflation is to be continued or other vagaries in¬ 
dulged in, we will in a year or so have another 
shrinkage of some fifty billions of dollars or 
more, and the public will again be the sufferers. 

The West is now being paid high prices for 
their agricultural products, and the South a high 
price for its cotton. Naturally they should con¬ 
vert their savings into securities, preferably gov¬ 
ernment bonds, but even they, the safest and best 
of all investments, will suffer great depreciation 
if, for the purpose of avoiding national, state, 
town, and municipal economies, inflation is con¬ 
tinued, or other foolish policies are pursued. 

Many persons feel, and we believe rightly so, 
that for several years we have been living in a 
fool’s paradise by imagining that we were to be¬ 
come rich by climbing over the dead bodies of the 
men who have been sacrificing their lives for the 
protection of their and our homes against the in¬ 
vasion of the Hun. Are we to continue to live in 
this fool’s paradise? 

Does it not seem wise to urge the Federal Re¬ 
serve Board to save the Nation from disaster to 
return to sound money and sound banking by 
compelling the sacrifices in every direction that 
the situation demands? Thrift, economies, and 


27 


efficiency will save not only the Nation from im¬ 
pending ruin, but will likewise guard the price¬ 
less Liberty for which we are so magnificently 
consecrating ourselves. 


28 


The 

Fall of the Modern Mahomet 

and 

The Dawn of a New Era 


i • 









\ 











I 





A Plea for Business Co-operation 

A Plea for Constitutional 
Government 

W E have now witnesssed forty-two months 
of world-wide human slaughter; rivers, 
streams and fields that were once given 
to peaceful pursuits, have been drenched with 
blood; the modern Mahomet, Kaiser Wilhelm 
the second of Germany, has defied the prophesy 
of the Book of Revelation of St. John the Di¬ 
vine; still, our spirit of hope is fully alive. We 
do not doubt the outcome of the War; in fact, 
we now know that it will finally result in the 
crumbling of the German empire, and that its 
people will be scattered to the ends of the earth. 

It seems opportune, therefore, to somewhat re¬ 
view the past in order that the “New Era” that 
has begun to dawn can be better understood. 
Most people had begun to believe that a “New 
Era” would be ushered in without warfare; we 
have already seen how sadly and rudely that 
belief has been destroyed. 

It is only a few years ago that the civilized 
world was viewing with great satisfaction the 
spirit of co-operation that was beginning to 
manifest itself in business as well as between 


31 


business enterprises and various civilized govern¬ 
ments. That spirit augured well, but the fruit 
never ripened. While laboring under the happy 
belief that it would ripen, I gladly responded to 
the requests of the Dean of the Wharton School 
of Finance of the University of Pennsylvania, 
Philadelphia, Penna., to address the students of 
that department first on March 30, 1912, and 
later on October 30th, of the same year. There 
are many parts of the addresses that I believe 
will be of interest at the present time, and, on 
that account, I reproduce them. 

Speaking on March 30, 1912, on “A PLEA 
FOR THE SPIRIT OF CO-OPERATION 
IN BUSINESS AND BETWEEN BUSI¬ 
NESS ENTERPRISES AND THE GOV¬ 
ERNMENT,” I stated: 

Modern civilization is giving little aid to those 
individuals who are working so conscientiously 
and assiduously in their efforts to better man¬ 
kind’s condition. Instead of the problems of 
life becoming simple, we find almost each suc¬ 
ceeding day adding to their complexity. Our 
interest in life is becoming broader and our 
wants rapidly multiplying; for achievements in 
science are impelling us onward with renewed 
effort, and continually instilling us with greater 
ambitions. The world will not stand still no mat¬ 
ter how vociferously we command it, and though 
—“THE CALL”—“BACK TO THE SIM¬ 
PLE LIFE”—will influence us to correct a dis¬ 
turbed economic equilibrium, and temporarily 


32 



THE FALL OF THE MODERN MAHOMET 


























































‘ 













cause greater farm activity at the expense of the 
factory, the allurements of modern civilization 
are so great that a serious attempt to withstand 
their influence is neither likely nor desired. 

Industrial life cannot be regulated with clock¬ 
like precision nor can conditions be made equal; 
but stability at least is possible, and every good 
citizen should lend his best efforts for its accom¬ 
plishment. In a land like ours, rich in resources 
of almost every kind and abounding in peace and 
plenty, the people have a right to demand a pros¬ 
perity in which the humblest citizen shall have a 
chance to share. 

Ever since the Civil War panics and business 
disturbances have been the rule, not the excep¬ 
tion, so that the discontent so prevalent to-day is 
nothing more than a voice of protest. To some 
considerable extent the protest is warranted, and 
to avoid unfair condemnation and hysteria, a dis¬ 
passionate and even laborious review of events 
which I shall attempt may prove helpful. 

In a letter written by Benjamin Franklin in 
1788, touching upon the effect of our revolution 
on wages in Europe, and pleading against low 
wages for the American citizen, he says: “It is 
in one word to forget that the object of every 
political society ought to be the happiness of the 
largest number.” Better doctrine could not be 
preached to-day; but to attain so desirable an 
end, stable industrial conditions must first pre¬ 
vail. I believe, however, that industrial peace 
will be accomplished, not through unrestricted 


33 


competition, but by the spirit of cooperation in 
business and between business enterprises and 
the Government. 

Touching upon this question in a recent 
article, I made the following comment: “Com¬ 
plete competition is destructive, chaotic and ab¬ 
horrent to the first principles on which life itself 
builds; it breeds cunning, avarice, dishonesty and 
unfairness. A government working for the wel¬ 
fare and best interests of the people should seek 
to avoid a condition that will result in such irre¬ 
parable loss and injury. The spirit of co-opera¬ 
tion, on the other hand, is as old as mankind, 
and when this spirit fully asserts itself, as it 
surely will, and along fair and just lines, its 
great advantages will be more clearly seen. Co¬ 
operation is, in fact, humanitarianism, and it is 
not against that principle, but its abuses, that the 
world is struggling. Well regulated and well 
directed, co-operation may not prove a panacea 
for all ills, but that a great betterment of man¬ 
kind’s condition will be brought about through 
it, no one can deny. Its intelligent application 
will avoid the entire elimination of competition, 
and likewise not extend to the inefficient and un¬ 
worthy the same advantages that capable and 
conscientious workers are entitled to.” 

Co-operation in business and the methods to 
be employed embracing profit sharing and stock 
distribution require a great deal of study. Our 
largest industrial corporation, the United States 
Steel Company, has found it expedient to offer 


34 


and sell to the employees its preferred and com¬ 
mon shares at established prices. Offerings of a 
limited amount are made yearly and certain con¬ 
ditions imposed. There are many other corpora¬ 
tions, and also a large number of business firms 
who have profit sharing plans of one kind or 
another, but I doubt if co-operative methods are 
as extensively employed as they should be. 
However, it is not my purpose to touch upon 
the matter further than to state that it is my 
belief that application of the principle wherever 
possible will materially aid in settling our indus¬ 
trial troubles. I shall confine myself, therefore, 
to commenting upon co-operation between our 
large banking institutions, railroad systems, 
manufacturing establishments, mining interests, 
etc., and government aid thereto. 

The opinion shared in by most of those en¬ 
gaged in financial and industrial enterprises is 
that co-operation of this kind has become imper¬ 
ative. Without it, it is impossible to bring about 
the healthy conditions needed for the diffusion 
of peace and prosperity throughout the nation. 
The Government may, without fear, encourage 
efforts in this direction; but the Sherman Anti- 
Trust Law should either be repealed or so modi¬ 
fied that it may be liberally construed. 

If a Government Commission composed of 
business men were to be appointed entrusted with 
the wise and intelligent application of the Sher¬ 
man Anti-trust Law, we would quickly solve the 
problems involved in what is called big business 


35 


or enterprise, as well as the tariff. Advantageous 
trade agreements, also absorption and concentra¬ 
tion of business enterprises might be permitted 
when not incompatible with the public good. We 
would thus substitute the method of European 
civilization to “build up business” for that of 
some of our radicals who propose to destroy it. 
Furthermore, such a commission would readily 
be able to prevent corporations, large or small, 
from taking undue advantage of a Protective 
Tariff, so that the present popular demand for 
its revision would cease; but what is more impor¬ 
tant, the great prosperity that the country, with 
its wonderful resources is entitled to, would im¬ 
mediately ensue. 

Let us now consider the important legislative 
measures effecting our industrial welfare which 
will indicate to what extent Government co-op¬ 
eration has been accorded to business enterprise. 
In this study which touches our banking system, 
tariff and corporations or so-called trusts, we will 
be able to observe the successes and failures of the 
Republican and Democratic parties. Through¬ 
out the legislation bearing on the above matters, 
the Federalists or present-day Republicans, gave 
their support to the principles of co-operation, 
and therein emphasized their desire for a strong 
national and paternalistic government, while the 
Democrats contended for State supremacy. 
Had unfortunate abuses not appeared with the 
establishment of our first National Bank, and 
considerably later with the protective tariff, our 
two great political parties would have been 
36 


obliged to find other issues to separate them and 
excite public interest. 

To my mind, the first Republican of the coun¬ 
try was none other than George Washington. It 
is true that with him the people knew no political 
party; but it was by Washington, Adams and 
Hamilton, then known as Federalists, that the 
seeds of the present Republican Party were 
sown. Their idea, as well set forth by Hamilton, 
was for a strong centralized government with 
very paternalistic tendencies. Opposition to the 
Federal Party was so ably carried on by Jeffer¬ 
son, the founder of the present Democratic 
Party, that the principles expounded by him kept 
its adherents in power almost continuously down 
to the Civil War. Their main contention was 
that the States should reserve for themselves the 
highest prerogatives, and look unfavorably upon 
Federal encroachments of power. So strongly 
did the people feel on this matter that the Demo¬ 
crats met with but feeble opposition for some 
years, and by 1820 the so-called Federal Party 
disappeared from politics. 

It was in 1824, when practically only one party 
existed, that the tariff question came to the fore, 
and protection was accorded by Congress to our 
manufacturers due to their utter distress. But 
as soon as prosperity was restored, great opposi¬ 
tion to protection developed by the Democrats, 
while the cause of protection was espoused by the 
National Republicans, later known as the Whig 
Party, of which Clay was one of its earliest and 
ablest leaders. 


37 


Protection, which is a form of paternalism, 
conforms well to the old Federal ideas, and is 
one of the many indications of national consid¬ 
eration given to internal affairs. We find the 
first suggestion of paternalism in the establish¬ 
ment of the National Bank, whose charter had 
been granted in 1791. But the bank and protec¬ 
tion had a stormy time of it during the presi¬ 
dency of Jackson. In 1836 the bank charter 
expired, and was not renewed, and the tariff was 
assailed indirectly by President Jackson vetoing 
a number of appropriation bills intended for in¬ 
ternal improvements. The outcome of these 
political dissensions was the spread of wildcat 
banks resulting in the panic of 1837. We have 
herein a striking example of unrestricted com¬ 
petition. Owing to this panic the present sub¬ 
treasury system was established, whereby the 
public revenues are not allowed to be deposited 
in any bank. 

Eighteen hundred and one to 1841 spells a 
line of continuous democratic rule. But the dis¬ 
asters of the panic were too great for the public 
to stand for, and the first Whig or National Re¬ 
publican came into office in 1841; Harrison hav¬ 
ing been elected. 

From Harrison’s administration to the Civil 
War there were other matters besides the tariff 
and a national bank to engage the attention of 
the people. Texas Annexation, the Mexican 
War and the Slave Question became influential 
in determining the names of parties and their 


38 


successes. The Democrats came back into office 
again in 1846 on the question of Texas Annexa¬ 
tion. Needless to say, the protective tariff was 
abolished, and a revenue act was passed in its 
stead. Eighteen hundred and fifty saw the 
Whigs, or National Republicans, successful, but 
success went to the Democrats in 1854, and the 
Whigs, or National Republicans as such, were 
lost sight of. 

The present Republican Party actually came 
into existence in 1854, and was to include every 
one who opposed the extension of slavery. As 
may be recalled, they were first designated as the 
Anti-Nebraska men, due to their opposition to 
the Kansas-Nebraska Act, an act which set forth 
that Congress could not prohibit or allow slavery 
in those territories, and that the matter should 
be left to the people of those territories to settle. 
It was thus on the question of the extension of 
slavery that the present Republican Party was 
founded, but they have throughout espoused the 
cause of protection and a National Banking Sys¬ 
tem. Their first candidate for president, Fre¬ 
mont, was defeated by Buchanan, so that the 
immortal Lincoln is the first president elected by 
the present Republican Party. Under Lincoln 
the Civil War was fought and won, and he died 
a martyr to the cause. Then the nation became 
confronted with a tremendous problem—for re¬ 
construction meant no easy task. Though John- 
son did not prove a happy successor to Lincoln, 
matters adjusted themselves and material prog¬ 
ress in our national welfare was made. 


39 


The first administration of Grant, the second 
duly elected Republican president, proved highly 
satisfactory, and wonderful prosperity ensued, 
but the familiar story of “too much progress,”— 
a panic, with its consequent depression was the 
result. 

The next president, Hayes, a Republican, 
served one term. It was during the Hayes ad¬ 
ministration that the Bland-Allison Act was 
passed, requiring the Government to purchase 
and coin 2,500,000 ounces of silver monthly. 
Specie payment was also resumed. 

The remaining administrations are still fresh 
in the minds of many of us. Garfield, whose 
death was so sad and untimely, was elected by 
the Republicans. Then the tariff question be¬ 
came an important topic again, and the Demo¬ 
crats had their first success by electing Cleve¬ 
land. Harrison was the Republican opponent 
of Cleveland, who was a candidate for re-elec¬ 
tion, and Harrison was elected. 

It was during the latter’s term of office that 
the Sherman Law for the purchase of 4,500,000 
ounces of silver monthly was enacted; likewise 
the McKinley Bill, providing for an increase in 
the tariff duties, and the much-discussed Sher¬ 
man Anti-trust Law. 

Though Cleveland was again the opponent of 
Harrison, the quick change of political sentiment 
in this country was shown, and Cleveland was 
elected. President Cleveland’s second term was 
marked by great business depression, resulting 


40 


largely from the effects of the Baring Panic of 
1890; reckless railroad building, and inflation 
caused by the Government purchases of silver 
under the Sherman Law. The silver purchases 
were discontinued, and tariff changes made 
through the passage of the Wilson Bill. The 
Democrats then took up the dishonest doctrine 
of the free and unlimited coinage of silver, and 
made Mr. Bryan their presidential candidate, so 
that in 1896, success again went to the Repub¬ 
licans. 

McKinley was twice elected president. Dur¬ 
ing the first term the Wilson Bill was repealed, 
and the Dingley Bill calling for materially higher 
tariff was enacted. The Republicans continued 
their successes, electing Mr. Roosevelt and then 
Mr. Taft, who is now holding office. The Paine- 
Aldrich Tariff Bill was promptly passed under 
Mr. Taft's administration, but now, several 
years later, due to a Democratic Congress, tariff 
revision is again being actively discussed. 

The review indicates the people’s acceptance 
of the principles of Jefferson until the Civil 
War, after which Republican doctrines met with 
favor. But though the events of more than a 
hundred years have passed into history, we still 
have new Government problems to deal with. 
Our industrial progress has been unparalleled 
and our power and influence made felt in almost 
every quarter of the world. With our un¬ 
matched natural resources, it is but human to 
expect disappointment if peace and plenty do 


41 


not prevail. Our many industrial disturbances 
and the business depression from which we are 
now emerging have subjected past administra¬ 
tions to severe criticism, and many persons fool¬ 
ishly believe that we are on the verge of a na¬ 
tional crisis. But a little further study of the 
past and present will show that we are working 
towards materially better conditions, and that 
for their fulfillment, we are dependent upon hon¬ 
est co-operation between business interests and 
the Government’s aid thereto. 

It will serve no purpose to review industrial 
conditions previous to 1870; great political dif¬ 
ferences and the newness of the country will 
readily account for frequent unsettled condi¬ 
tions. The many panics since that date, with 
their consequent periods of depression, occasion 
great disappointment; and it is reasonable to de¬ 
mand legislation aiming to prevent their recur¬ 
rence under conditions within our control. 

From 1870 to 1900 an open field with unre¬ 
stricted competition prevailed. Nearly all of the 
large corporations were formed after the year 
1900, from which date to the present time there 
has been an occasional effort at co-operation be¬ 
tween the business interests. Covering the entire 
period from 1870 to 1912, Government co-opera¬ 
tion has been of its former negative character, 
and occasioned more harm than good; the con¬ 
tinued tariff agitation, inflation from silver pur¬ 
chases, and misdirected steps in corporation or 
trust regulation, have simply increased business 
difficulties. 


42 


Our country may even to-day be likened to a 
powerful engine without a governor, frequently 
over-supplied with steam, and at times hardly 
sufficient to run at half speed. Many of our busi¬ 
ness interests feel, therefore, that industry has 
been the toy of time wound up to run only at ir¬ 
regular intervals. Their demand for greater 
stability is justified, and let us hope that it will 
soon be realized. 

We are still waiting for the fruits of the Mone¬ 
tary Commission and the Tariff Commission. 
We have already, wisely, provided an Interstate 
Commerce Commission with its court of com¬ 
merce to whom is submitted the welfare of the 
railroads. 

It is my opinion that an Industrial and Labor 
Commission in charge of labor disputes and the 
application of the Sherman Anti-trust Law is 
greatly needed. If we will submit our national 
problems to proper commissions for solution, the 
much-needed healthy co-operation will be 
brought about. Fortunately, the tendencies 
seem to be in that direction. 

The march of progress with the advent of 
steam, electricity, the telegraph and the many 
human devices for facilitating business enter¬ 
prises have largely obliterated State lines so that 
many matters formerly requiring State regula¬ 
tion are now of national concern. Encroachment 
on the States, nevertheless, should be made with 
caution. Furthermore, to what extent Govern¬ 
ment ownership should be carried is not easily 


43 


determined, but Government by commissions will 
relieve us of any possible embarrassment in that 
direction. The Government co-operation herein 
described permits the adoption of its principles 
among the business interests themselves, but co¬ 
operation will be discarded with disgust and 
fought to the bitter end, if not fairly and squarely 
applied. 

Recent satisfactory experience with business 
co-operation is worthy of mention. Certain 
large financial and commercial interests, by rea¬ 
son of the panic of 1907, with its accompanying 
horrible revelations, were made to realize that an 
honest effort to stabilize conditions was both 
necessary and advantageous. But the effort at¬ 
tempted only brought negative results; greater 
success was prevented through circumstances be¬ 
yond control, for it is only within the province of 
man to propose; not to dispose. 

To understand the above effort let us refer to 
figures affecting the iron industry, which has be¬ 
come concentrated in comparatively few hands. 
The present possible pig-iron production of the 
country, which greatly exceeds our needed ca¬ 
pacity, is approximately 120,000 tons daily. By 
January 1 , 1909, the daily production, which 
was 87,000 tons, had begun to over-run consump¬ 
tion. As soon as the large financial interests 
grasped the situation, curtailment was ordered, 
bank credits were more cautiously extended to 
the commercial community, and for a period of 
eighteen months, terminating July 1 , 1911, the 


44 


pig-iron production of the country had been re¬ 
stricted to about 65,000 tons daily. A reason¬ 
ably quick readjustment by co-operative methods 
was thus accomplished. Had nature blessed us 
with bigger harvests in the summer of 1911, the 
wheels of industry would now be turning with 
greater zest. Having been in so prepared a state, 
a more serious business disturbance was avoided. 

With time now behind us, we can, with natural 
inborn optimism, look to the future with confi¬ 
dence. Curiously, we find many financial writers 
attributing our present business depression en¬ 
tirely to the high cost of living and the confused 
political outlook; only a few refer to the great 
disappointment in the grain crops that were gar¬ 
nered in 1911. Abundant agricultural returns 
for 1912 and reasonable demands of labor will 
quickly restore us to our old-time prosperity, 
provided the tongues of political demagogues can 
be silenced; for as in the wake of the storm comes 
havoc, so does adversity uncover the charlatan. 
With the stars and stripes once again unfurled 
to fair weather breezes, perhaps real patriotism 
will beat in the breast of many a misguided 
statesman. But past laxity in our Government, 
and lack of appreciation of moral responsibility 
in some financial and commercial quarters, re¬ 
sulting in the just complaints of a discouraged 
people, afford reason for neither continued sense¬ 
less attacks on capital nor opposition to the prin¬ 
ciples of co-operation. We must remember that 
these same unfortunate conditions can and do 


45 


arise under complete competition. Furthermore, 
the possible disasters from the free use of credits 
and allowance of full swing to men’s energies 
and efforts are too great for the modern world to 
sanction. 

Complete and unrestricted competition may 
witness periods of prosperity, but they are in¬ 
variably followed by long periods of depression. 

The Government should, therefore, encourage 
fair co-operation, and be a party thereto, and not 
endeavor to compel destructive competition. 
Competition in the larger affairs of life is 
archaic. 

Life teaches that from the family to the tribe, 
—the race and the nation,—we build—we con¬ 
struct through co-operation—we unite for com¬ 
mon defense against the enemy, whether it be 
disease, famine, fire or the sword. We are 
taught organization for the purpose of combat¬ 
ing the foe; not the friend. When the eyes of 
the people are once opened, political dema¬ 
gogues, whether already basking in the sun at 
the nation’s capitol, or desiring to, will curry 
little favor. 

The days of Monroe contain some of the 
brightest pages in American history, and a tired 
and dispirited people long for their return. 
Truly, GREAT will be the man who ushers in 
another era of good-feeling; and we may feel 
certain that if it is to be enduring, its way will 
be paved with the nationalism of Washington, 
Adams and Hamilton, which means fair and just 
co-operation. 


46 


On the second occasion, October 30, 1912, just 
seven months later, it was my privilege to again 
appear before that same body of students, and 
to deliver an address to them under the title 
“THE STATESMAN, POLITICIAN, RE¬ 
FORMER, AND SOME OF OUR PROB¬ 
LEMS.Therein I made the following 
plea for CONSTITUTIONAL GOVERN¬ 
MENT. 

A ceaseless effort for the improvement of the 
conditions under which we live is manifesting it¬ 
self about us, and to-day greater thought and 
study are being given to the problems of life than 
at any time in history; in fact the interest dis¬ 
played is becoming world-wide, and we observe 
that many of those problems formerly left to the 
individual to solve, are now receiving Govern¬ 
ment consideration. This broadening of the 
functions of government and the creation there¬ 
by of its greater interest in social and industrial 
conditions has induced a far larger number of 
persons to seek political preferment. Under this 
political development the statesman, the poli¬ 
tician, and the reformer are being subjected to 
closer scrutiny. 

Though claiming, as servants of the people, to 
be one in purpose, these principal types of our 
political life differ considerably. 

Involved as we are, at the moment, in a great 
political struggle, it should prove of interest to 
review some of our problems and the manner 
and method usually adopted in considering them. 


47 


A philosophical or technical treatise on Gov¬ 
ernment is a serious undertaking, and one which 
I do not feel competent to enter into, but I am 
impelled to make some comment on the object 
and form of government, as it may aid to a better 
understanding of my remarks. 

It may be simple enough to state that the ob¬ 
ject of government is mutual protection and the 
preservation of property, but it is extremely dif¬ 
ficult to prescribe a form of government that will 
best serve a people, as so much depends upon 
their intelligence and character; and even the 
adoption of a certain form does not necessarily 
mean its establishment. For instance, Mexico’s 
Constitution is much the same as ours, and yet 
for thirty-five years the personal figure of Diaz 
alone dominated Mexican affairs. I fully recog¬ 
nize that it was fortunate for Mexico that Diaz 
usurped power; for due to the conditions then 
existing, the nation required for its proper guid¬ 
ance the strong arm of a dictator. The moment 
these conditions materially changed, revolt set in 
resulting in the substitution of a less personal for 
a more factional government. Future events 
alone will determine whether Mexico is prepared 
for even this small political advance which she 
has made. 

I believe that our Constitution provides amply 
for an enlightened people, the best form of gov¬ 
ernment that can exist; and as an enlightened 
people, it is our duty to see that a government 
which conforms thereto is established; but to se- 


48 



ft. 










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» 


THE DAWN OF A NEW ERA 

























































































































































































































cure what Lincoln pleaded for “A Government 
of the People, by the People, and for the People” 
requires the enactment of reasonable laws and 
their impartial enforcement. 

However, we must appreciate the fact that 
our interests have become so diverse and com¬ 
plex that the statesman finds it increasingly dif¬ 
ficult to frame reasonable laws; unfortunately, 
the politician generally acts in entire ignorance of 
this fact, and the reformer, though he may be 
aware of it, will err from sheer excess of zeal. 

Happy the nation whose political history is 
free from serious financial and economic prob¬ 
lems. We, with our great and varied resources 
cannot escape them. 

In order to overcome the defects of any of 
our problems, it would be wise to create co¬ 
operating commissions which are necessary to 
aid in adjusting the many difficulties which 
arise from our constantly changing conditions. 
Such a plan to be sure is not free from criticism, 
for we would be dependent upon the intelligence 
and integrity of the men composing these com¬ 
missions. Wise and honest effort would natur¬ 
ally be essential to success, while demagogic ten¬ 
dencies, and political pandering would spell dis¬ 
aster. 

It is well to bear in mind in our present politi¬ 
cal excitement that the honeyed words of politi¬ 
cians, and the unrealizable promises of reformers 
must be considered with caution; for notwith¬ 
standing these assurances the demand for rea- 


49 


sonable rates by our railroads must eventually 
be recognized; and our trade conditions are so 
adjusted to a protective tariff that only a moder¬ 
ate reduction in tariff rates would be advisable. 
Furthermore, our banks, which are the wells of 
credit, should be given much needed legislative 
aid, rather than made the plaything of Congress¬ 
ional or other investigating committees. At the 
present moment there is an unmistakable drift 
towards government regulation and supervision 
of the larger affairs of life; we should readily 
accept such regulation and supervision, but at the 
same time we should insist that it shall stop there, 
so as to maintain for us a reasonable right to man¬ 
age our own affairs; for though Government 
Ownership is essential in some instances, I fear 
that its undue extension would prove harmful; 
human nature is difficult to contend against, and 
we should find that anything which tends to les¬ 
sen the importance of the individual and destroy 
initiative, would surely act as a barrier to prog¬ 
ress. It seems, therefore, that the best solution 
of our problems lies in a reasonable government 
regulation and supervision. In this connection 
I wish to state that we should not minimize the 
importance of the “Pension,” the “Insurance- 
Liability” Acts, “Child Labor” Laws, and other 
similar measures. On the contrary, we should 
give every aid and encouragement to them, as 
they aim to establish healthier and better condi¬ 
tions among the people. But though we must 
make every effort to strengthen the weak, we 


50 


must not in doing so weaken the strong; so that 
great care should be taken in the preparation of 
our laws, and experienced minds engaged to 
solve the various complicated problems which 
continually arise. 

The employment or the interference of politi¬ 
cal or other novices will simply retard progress. 

It would be well for those who fear the rising 
tide of Socialism, to learn definitely that every 
intelligent and thinking person is socialisticallv 
inclined; and that sane and sensible men, will aid 
in every movement that is in the true interest of 
our people. It is of the utmost importance, 
however, that we neither destroy initiative nor 
give undue encouragement to the inefficient and 
worthless; consequently the wisest legislative 
course to pursue is not always easily determined. 
Notwithstanding this difficulty the politician as 
I have indicated will not hesitate to frame what 
he considers proper laws, and the impatient re¬ 
former in order to enforce his views, will brush 
aside all obstacles, constitutional or otherwise; 
while statesmen with a purpose equally sincere, 
will likely differ as to what is the best legislation 
and the wisest manner and method for securing 
it; for they alone appreciate that in movements 
for reform we are all actuated by a common 
ultimate aim. 

For whether it be social justice—practical 
socialism—benevolent despotism—or good gov¬ 
ernment—there is involved a single purpose; to 
best serve the interests of the people. 


51 


However, if in settling our political differences 
law and order are to prevail and our constitution 
is to stand, we must avoid personal, factional, 
and even majority government, as opposed to 
constitutional limitations. 

Adherence to constitutional government will 
preserve the rights of the minority—best ad¬ 
vance individuality—and make for greater prog¬ 
ress. Its impairment means the stifling of our 
liberties and retrogression. As we are an en¬ 
lightened people, other than constitutional gov¬ 
ernment with us would be a crime. 

We should make sure, therefore, that our fore¬ 
most political leaders are true statesmen, and 
that their banners carry the inscription: “Con¬ 
stitutional Government.” 

It may be pertinent to remark that the real 
danger lying in the path of a socialistic move¬ 
ment is that it might be carried beyond practical 
lines; in which case our industrial progress 
might be temporarily retarded and agriculture 
unduly stimulated until the movement had spent 
its force. But the occurrence of a radical move¬ 
ment is perhaps remote, for the good sense of our 
people can generally be relied upon. In the con¬ 
flict between capital and labor, or what may be 
more correctly termed, the contest between 
brains and brawn, there are many difficult prob¬ 
lems involved which the statesman recognizes 
are not at all times readily solved; nevertheless, 
the politician will consider it an easy matter to 
adjust the many differences between capital and 


52 


labor, and the reformer in taking a part therein, 
will be apt to place his influence against capital; 
if the politician and reformer had a better knowl¬ 
edge of the rudiments of finance and economics, 
it would result in a more rational handling of 
these differences. How much more satisfactory, 
it would be for instance, if in following their 
natural sympathies they would not overlook the 
fact, that by continually yielding to its demands 
labor is not benefited as much as is generally sup¬ 
posed ; for when the relation of costs to profits is 
unfavorably affected, either a higher price even¬ 
tually results or production diminishes; it is pru¬ 
dent to mention here that we must also not lose 
sight of the fact that both capital and labor are 
subject to competition and that each is entitled 
to a just remuneration. 

Labor is benefited normally only through 
efficiency, ingenuity and discovery. 

In our high and continually advancing stand¬ 
ard of living which, unfortunately, already bor¬ 
ders on waste and extravagance, and the 
tendency to still lessen the number of hours of 
work in many fields; the benefits that all are de¬ 
riving from the world’s great progress should be 
apparent; but the moment is not a propitious one 
for clear and sound reasoning, so we must not 
be surprised when campaign orators, instead of 
emphasizing the great advantages that labor is 
enjoying—prefer to create discontent among the 
wage earners, and hold out almost unattainable 
promises, merely to influence their votes. Eight- 


53 


hour working days and minimum wage scales are 
exceedingly attractive in theory, but of little use 
if they result in simply causing either higher 
prices or a condition where there would be little, 
or no work at all, to be done. The real root of 
our troubles is national extravagance, and its 
correction is the reform that should be preached 
to-day. 

Let us hope that politicians and reformers 
will soon learn the simple laws that govern fi¬ 
nance and economics; for then they will en¬ 
deavor to have reforms follow as fast as they are 
earned and not attempt to anticipate them. Of 
the many influences which bear upon the law of 
supply and demand some are at times artificial 
and may require government intervention. Oc¬ 
casionally it is in the effort to stabilize conditions, 
as with the coffee valorization scheme, that eco¬ 
nomic law is grossly disturbed; in such cases 
business prudence will generally dictate a return 
to a rational policy. In the long run, however, 
neither financier, nor reformer can interfere with 
the natural trend of economic law. 

Perhaps one of the strangest conditions which 
confronts the world to-day exists in the labor 
mart; it might be best described by stating that 
for the moment brains are at a discount, and la¬ 
bor at a premium. We find therefore that many 
of our professions are over-crowded, which causes 
a lower standard of morals and efficiency in the 
professions affected. Fortunately, that condi¬ 
tion will reasonably soon right itself as it is sub- 


54 


ject to the same economic law of “Supply and 
Demand.” We see herein emphasized, however, 
the need not only of dignifying labor in a way 
that will respect the man and his burden alike, 
but also of the need of more industrial educa¬ 
tion. 

Though a college man myself, and not decry¬ 
ing the blessings of higher education I feel that 
our universities and colleges should profit by this 
condition and aim to supply the world with men 
just as fit by hand as by head. More skilled 
hands, and fewer strong heads, will quickly cure 
us of many vagaries that are now in vogue. 

Our universities and colleges have been re¬ 
cently censured for fostering socialistic prin¬ 
ciples and thereby increasing discontent among 
the people. It should be your proud boast that 
you openly espouse the cause of practical Social¬ 
ism; for with the knowledge of finance and eco¬ 
nomics that you young men will possess you will 
then be able to point out the pitfalls of imprac¬ 
ticable dreamers so that real progress can be 
made for the world’s betterment. 

I hold no brief for the man of wealth, but I 
feel that much of the recent criticism of him 
has been unduly severe and frequently un¬ 
warranted. If the present-day socialist were 
more practical he would recognize, that men of 
large means are the inevitable custodians of 
wealth and that antagonism should be directed 
not against its use, but its abuse. 

He might, however, be justified in complain- 


55 


ing that in the accumulation of wealth we are 
inclined to deprive one generation of certain 
earned and deserved advantages merely that 
they may accrue to a future one. But in the 
effort for the general improvement of social 
conditions, we should everywhere recognize the 
helping hand of the rich, as their wealth and en¬ 
couragement have made possible many of the 
movements of reform. In fact most of those 
movements were given birth in the institutions 
built up by men of wealth, and are now being 
exploited by politicians and reformers and 
launched with the flavor of originality. 

But though it matters little who wears the 
mantle of approval, we should insist that those 
who labor for the common good shall direct their 
energies along sane and wholesome lines. 

While it is true that legislation can only in¬ 
terrupt prosperity, for its real existence depends 
upon our individual efforts and nature’s response 
thereto; still it is absurd for us to encourage a 
radical change in political measures that have a 
business bearing; business upheavals are a bene¬ 
fit to no one except the shrewd speculator, so that 
tariff and similar measures should be divorced 
from politics. As conditions have so developed 
during the past few years that the successful 
business man will not seek political preferment, 
the time is opportune to press him into service 
through appointment to government commis¬ 
sions. The aid that he could render in that way 
should be incalculable. 


56 


A review of the political history of our coun¬ 
try will reveal that the statesman, the politician, 
and the reformer have never ceased to play their 
respective parts, and that each has filled a neces¬ 
sary role; so let us appreciate the fact that it is 
through the joint efforts of all, that we have 
grown to astounding greatness; that with those 
thirteen original colonies, which were ready to 
spend millions for defense but not one cent for 
tribute—we all have had a part in building up a 
nation of over ninety millions of people, whose 
influence to-day is felt in every quarter of the 
world. But if, as so many claim, it is our mission 
to bear the torch of liberty, so that it will be an 
inspiring example to all mankind, it behooves us 
to so conduct ourselves that our own liberties 
will not be endangered. 

The cry of the reformer for greater justice 
must be given a respectful hearing, and we must 
not at all times refuse to recognize political ex¬ 
pediency ; but wise and cautious efforts should be 
behind every political movement or measure; and 
shirtsleeve or dollar diplomacy must not super¬ 
sede statesmanship. 

Statesmanship requires great breadth of mind; 
and since it is naturally absurd to expect every 
political worker or reformer to be possessed of 
more than fair intelligence, we can hardly expect 
them all to be statesmen; if they will simply be¬ 
come instilled with honesty, labor with patience, 
and realize the difficulties that beset the path of 
man, greater harmony will prevail and more 


57 


tangible results will be obtained. We would 
then not look with so much suspicion upon those 
engaged in public life—and our affairs would 
be more satisfactorily administered. 

There is much to admire in the deeds of those 
who fill the pages of our history; and the men 
who bore the brunt and burden of the Revolu¬ 
tion, compare favorably with the heroes of any 
age. Still we must remember that the nation 
that gave us our Washington-Franklin-Jeffer¬ 
son and a host of other great and distinguished 
men was less than a century later engaged in one 
of the saddest and most terrible conflicts of mod¬ 
ern times. 

Wise councils were cast to the winds, the pas¬ 
sions of men unduly inflamed and a war for 
property under the guise of principle was so 
fiercely waged that history has recorded events 
ruthlessly stained with blood. 

Unfortunately there are times when human 
sacrifice must be made and great suffering en¬ 
dured for the accomplishment of a certain good. 
The Civil War was without question such an 
occasion. 

But no similar condition confronts the nation 
to-day, and he who distorts and magnifies wrongs 
is an enemy to his country. There is no doubt 
that we are suffering from some evils that can 
and will be cured by legislation; and while it is 
true that we should not place property rights 
above human rights—we must also be careful not 
to unduly magnify human rights. 


58 


With more honesty and charity, and a deal 
greater efficiency we shall reach the goal that all 
are striving for alike, and ideal government will 
change from hope to realization. 

As we are now on the brink of our national 
election let us with profit study the character of 
those who have dominated our national life, for 
we will find that in war or peace—adversity or 
prosperity—the nation has never failed to give 
a good account of itself; so that to-day we 
occupy an enviable position in the world’s affairs. 

Science, art, literature, medicine, and every 
other worthy field has felt the inspiring touch of 
the genius of our people. But as great as is the 
progress that has been made and to which we 
have so liberally contributed—it is as naught 
compared with the possibilities of the future. 

If, however, we wish to preserve our progress 
and properly utilize the great riches that nature 
has entrusted to us, it is necessary that we should 
give heed to our form of government and use 
great care in selecting the men that are to ad¬ 
minister it. It is particularly important that we 
shall examine the character of those who are now 
clamoring for office, whether it be municipal, 
state or federal; we should minimize the impor¬ 
tance of the principles that each political party 
may claim to be contending for and inquire solely 
as to the stability and integrity of each and every 
aspirant for office. Let us remember that whole¬ 
some measures come from sane and sensible men 


59 


and our welfare will be in good keeping if we 
confer favor wisely. 

I entertain no fear for our future, for above 
the din and clatter of the crowd can be heard the 
voice of the people demanding in no unmistak¬ 
able manner the preservation of our Constitu¬ 
tion; so that Peace, Progress, and Prosperity, 
may prevail. May Statesmen, politicians, and 
reformers, all alike hearken unto the voice of the 
people. 

-O- 

Events followed thick and fast after the date 
of this last address, and it will be observed that 
no heed was given to the warnings that had 
been sounded. As to matters political, our 
present President Mr. Wilson was elected 
to office, and he immediately proceeded to give 
serious attention to the various problems with 
which the Nation had been so deeply concerned. 
I regret to say however, that had it not been for 
the present world-conflict, that instead of Peace 
and Prosperity which the Nation enjoyed dur¬ 
ing the last two of those four years under Presi¬ 
dent Wilson’s first administration, we would 
have experienced a financial panic and frightful 
commercial and industrial depression as a result 
of the unfortunate policies that the Administra¬ 
tion saw fit to adopt. The War started in July, 
1914, and it was not long after the first shock 
therefrom that we began to experience great 
trade activity. On the basis of Peace and Pros¬ 
perity Mr. Wilson was re-elected President. 


60 



It is not my intention at this moment to crit¬ 
icize or to discuss in any way the propriety of 
our delay in espousing the cause of our Allies. 

It does seem opportune, however, to repro¬ 
duce a statement that I made for the American 
Defense Society in May, 1917, under the cap¬ 
tion: 


OUR GREAT OPPORTUNITY 


T O President Wilson and the American 
people has been offered the biggest oppor¬ 
tunity for world service that could possi¬ 
bly be conceived, and coupled with it a responsi¬ 
bility so grave that if we fail to meet it fairly 
and squarely, a world wide calamity will result. 

The present is no time to minimize the devas¬ 
tation and losses that have resulted, and that are 
continuing from the holocaust of war, not to 
deny that blessings of Providence have been 
withheld at a time when we most sorely need 
abundance from the soil. 

Rather let us recognize the seriousness of the 
situation so that we may the better meet it. Let 
us continue as we have now started to do to apply 
ourselves with all our strength and our intelli¬ 
gence to conquer the deplorable situation that is 
so largely of man’s making, and with God’s help 
we should, in a reasonably short time, not only 
bring the war to a satisfactory conclusion, but 
also correct many of the ills from which Europe 
is so keenly suffering. Apathy at this critical 
moment will bring to us disaster and fasten 
Prussianism upon the world. 


61 


For years we have been a nation of industrial 
slackers, and at the same time we have not taken 
proper advantage of the resources nature has 
placed in superabundance at our feet. Honest 
and intelligent application of our energies can 
largely overcome the ravages of war, and permit 
a continuance of our great industrial activity. 

The present world war owes its origin to Ger¬ 
many’s ambition to wrest commercial supremacy 
from England. It has now become a world strife 
between ourselves and the Allied Powers on the 
one side contending for democracy, and the 
Central Powers on the other for autocracy. If 
Germany, who was enjoying a peaceful com¬ 
mercial conquest of the world, had been content 
therewith and had not resorted to the arbitra¬ 
ment of war, she would have met with complete 
success, as the commerce and industry of Eng¬ 
land and the United States were suffering, not 
only from long and continued conflict between 
capital and labor, but at the same time the inter¬ 
ests of the public were being scandalously 
neglected. 

With us in particular, both capital and organ¬ 
ized labor were insatiable in their respective de¬ 
mands, and no imperial government ever im¬ 
posed greater tyranny than those two contending 
forces. And they were so thoroughly absorbed 
in serving their own selfish purposes that they 
gave little thought to preparation for adequate 
defense against a military power. 

Germany was well aware of this unfortunate 


62 


state of affairs and, thus encouraged, proceeded 
to try to profit thereby, for German “kultur” did 
not contain any of the refinements of our day. 
Her brusque and brutal methods, therefore, have 
set the world aflame with war. 

Opportunity had been knocking loud and long 
at Germany’s door. Years of intelligent, ener¬ 
getic and efficient application of all of her 
powers and resources had easily placed her in the 
front rank for commercial and industrial 
supremacy. In fact, Germany’s superiority was 
so generally recognized that many of our citizens 
allowed themselves, in their admiration for her, 
to be lulled into a false sense of security and 
continued to be, even up to our declaration of 
war, supporters of the Central Powers. Happily 
the attitude taken by them was with no treason¬ 
able intent; they were simply blind to the real 
situation. 

Having chosen to blaze her commercial way 
through military despotism, Germany has awak¬ 
ened the wrath of the world. The irony of fate 
will sound her doom, for I feel confident that 
even we are at last aroused to the seriousness of 
the situation and the character of the task con¬ 
fronting us and our Allies. 

It is unfortunate that as we enter the conflict 
we must admit that, for some few years our ten¬ 
dency has been towards profligacy and wild ex¬ 
travagance, while profits from the war have 
accentuated this deplorable condition. If now 
our sons must be sent to the trench that mothers, 


63 


wives and children may not be defiled and that 
they may be saved from butchery, the nation at 
least should emerge the better from the ordeal 
through which it will have passed. 

As to the wisdom of having so long delayed 
espousing our Allies’ cause future historians 
may differ, but our President has met the situa¬ 
tion manfully and magnificently, and his address 
to Congress of April 2, 1017, will for all time be 
recognized as one of the world’s greatest and 
sublimest state documents. 

The cradle of Liberty found its first real rest¬ 
ing place with us, so that now it becomes our 
sacred duty to aid in lighting Liberty’s torch in 
every part of the world. 

God grant “victory” to the United States and 
her Allies that they may without further inter¬ 
ruption proceed on their march for LIBERTY 
—EQUALITY—FRATERNITY. 


Unfortunately the great opportunity referred 
to in the foregoing article was not taken advan¬ 
tage of, with the result that we have now under¬ 
gone forty-two months of world-wide human 
slaughter, and Peace is not yet in sight. 

To win the war we must stop playing at war, 
and in the language of the inimitable Colonel 
Roosevelt, we must hit hard, and not soft. Dur¬ 
ing the past few months we have learned a great 
deal about hitting hard, but there is now some¬ 
thing more required than that. It has become 


64 



our sacred duty to apply ourselves in deep earn¬ 
est and enter into the spirit of the task with heart 
and soul if we wish not only Victory, but also TO 
WIN THE WAR FOR PERMANENT 
PEACE. 

We must furthermore bear in mind that Vic¬ 
tory through patriotic fervor for a war, whose 
cause is righteousness and justice, means in the 
end not only a spiritual America, but a spiritual 
World. 

Students of political, financial and economic 
affairs must admit that the war was inevitable; 
inevitable, not because it was impossible to avoid, 
but simply that years of mistakes on the part of 
national political leaders prepared the way for 
a world conflict. But if there had been no world- 
war, we would have witnessed frightful civil 
strife in many parts of the world. The result 
of such strife would have been very serious and 
disastrous, but it would have been nothing com¬ 
parable with the havoc wrought by the present 
world conflagration. 

The nation that is indirectly responsible for 
the present day agonies is Russia, and the an¬ 
archy that now prevails throughout her empire 
is a natural sequence to the incompetent, reck¬ 
lessly extravagant and corrupt government that 
had prevailed for so many years. 

France had been pouring her gold into Russia 
in the hope and belief that, in conjunction with 
the latter’s vast resources, there would emerge a 
mighty and powerful nation; a proper Russian 


65 


policy would have encouraged business enter¬ 
prises in a way that would have assured such an 
outcome. The crumbling of this tremendous 
empire not only hastened the present world-war, 
but also found Russia able to give little assist¬ 
ance in the effort of the Allies to establish peace 
and justice throughout the world. 

Germany’s statesmen were watching with 
keen interest the commercial and industrial de¬ 
velopment of other nations. It is now univer¬ 
sally known that her ambitions were carrying her 
to Bagdad. In anticipating the development of 
weakness in other countries, Germany was mak¬ 
ing tremendous preparation for the very war she 
finally forced, but she foolishly imagined that her 
strength was such that world conquest would 
come easily and quickly. The present day 
Armageddon is a result of her unwarranted and 
unforgivable action. Germany’s future will be 
determined by the Allies on terms that are based 
upon right and justice. 

The statesmen of England and the United 
States now realize the mistake of self-compla¬ 
cency, while capital and labor wax fat; that 
democracy means what Lincoln claimed for it— 
A Government of the People, by the People, 
and for the People. 

As to Russia the people of the civilized world 
must extend to her the keen sympathy to which 
she is entitled. If, with her, chaos continues for 
a time, we must be patient. The Russian empire 
covers a tremendous territory and is composed 


66 


of vigorous, sturdy people who have only begun 
to taste the fruits of victory over an autocracy 
whose iron heel had been on their breasts for so 
many years. She will require not one but many 
truly great leaders, possessing a knowledge of 
the world’s affairs, and who will wisely stretch 
out their hands to the Allied nations for help to 
build up a stable government. Whether this will 
be done by preserving the empire, or whether the 
needs of the country will be such as to require a 
setting up of several governments, is something 
for the future to determine. 

But the Bolsheviki must come to a realization 
that bombs and gatling guns, turned on their 
own flesh and blood, are not the means by which 
order will be brought out of chaos. They must 
learn that debts honestly contracted must be 
repaid, for repudiation of obligations cannot be 
tolerated by the civilized world. 

Governments are held together by a recogni¬ 
tion of honesty toward each other. The constitu¬ 
tional form of government must be adopted and 
adhered to. Respect and consideration must be 
shown for all classes. It is apparent, however, 
that progress toward constitutional govern¬ 
ment is to be interrupted until the Bolsheviki’s 
teachings can be overcome, for the Bolsheviki 
catechism does not seem to recognize that the 
object of government is mutual protection and 
the preservation of property. When this is ap¬ 
preciated, the form of government to be adopted 
well may receive consideration. The Bolsheviki 


67 


idea seems to be that labor should receive all the 
rewards that a government has to offer. Its ad¬ 
vocates fail to realize that in such a heresy prog¬ 
ress is bound to cease. 

Naturally if we followed their precepts we 
would soon destroy initiative and the world 
would not move far from farm activity. Labor 
has been greatly benefited through the progress 
that the world has made, and to continue to en¬ 
joy the benefits of civilization it must learn that 
only through efficiency, ingenuity and discovery 
can we all be nprmally benefited. The great 
trouble with most people is that they do not 
realize that public improvements are just as 
much benefit to the poor as to the rich. 

Alien socialism apparently stands for the seiz¬ 
ure and division of other people’s property; sav¬ 
agery, monkey-wrenches in the machinery; in 
one word, anarchy. If Russia is to tolerate 
parties that advocate such measures, it will be a 
long time before peace and prosperity will come 
to her. The future of Russia, however, is not 
only in the hands of her own people, but lies with 
the Allies as well. If she stretches out her hand 
in an honest way asking for aid and guidance 
through her troublous times, peace and prosper¬ 
ity will come to her reasonably soon. 

As for Germany, the Modern Mahomet, 
Emperor William the Second, and his people, 
are defying—as did King Solomon and his 
people—the prophesy of the Book of Revela¬ 
tion of St. John the Divine; unrepentant Ger- 


68 


many will eventually learn that, the wages of sin 
is death. 

In an article The War Beautiful, written by 
Cleveland Moffett for McClure’s Magazine in 
October, 1917, there appeared the following: 


“I believe,” said Mr. Guggenheim, “that the end 
of this war will mark the end of huge fortunes. After 
Mr. Rockefeller, it is likely that the world will never 
again see an accumulation of a thousand million dol¬ 
lars in the hands of one person.” 

“And yet the war has increased many old fortunes 
and created many new ones,” I remarked. “I sup¬ 
pose the copper interests alone-” 

“Yes, yes,” he nodded, “the copper interests have 
made thirty or forty new millionaires, war-million¬ 
aires; I admit that.” 

“And the Wall Street interests? The munition 
makers? The food speculators?” 

“Of course that is quite true, but they may not 
keep their accumulations. It is easy for war to take 
away what war has given—and much more.” 

“You mean by a progressive income tax?” 

“Precisely. War is making us accustomed to the 
idea of profit-control. More and more people are 
asking: “Why should anybody get more than a cer¬ 
tain reasonable profit out of any enterprise? As a 
matter of fact, why should they?” 

“How about incentive to action? What motive will 
rich men have to organize and carry on great indus¬ 
tries and business activities if you take away their 
dreams of wealth?” 

“That is a good point, an excellent point,” said Mr. 
Guggenheim. “All men, whether poor or rich, need 
some encouragement, some stimulation of ambition to 
make them put forth their best efforts, but, remember, 
it is not to accumulate further millions indefinitely 
that rich men work. As soon as a man has fifty or 
sixty thousand dollars a year to spend, lie lias about 
all that money can give him. What he wants after 


69 



that is power. He continues to work for the joy that 
he gets in the exercise of power. In the future our 
able rich men will find that joy is power by associat¬ 
ing themselves with the Government, for government 
is power." 

"Thus far our rich men have preferred to remain 
outside of the Government and have amused them¬ 
selves by personally operating vast money-making 
enterprises; but when the Government takes over their 
enterprises or rigidly controls them, as it will, then 
these men will turn to the Government and will find 
there an outlet for their ambition and abilities." 

"You think that will be one of the great results 
of the war in America?" "Yes, and one of the best 
results." 

I feel that I am warranted in saying that that 
prophesy is already practically fulfilled. 

May I not then be permitted to again follow 
a prophetic trend and predict with certainty that, 
the whole world that for so many years has been 
steeped in folly and sin, will eventually be com¬ 
pletely cleansed, and be prepared to go forth in 
a new effort for the maintenance of Righteous¬ 
ness and Justice that there may be PEACE ON 
EARTH AND GOOD-WILL TO MEN . 


70 






















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